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Wednesday, May 30, 2012

Speciality Restaurants Ltd , owner of India’s largest Fine Dining restaurant chain listed in stock exchanges today .Due to negative market sentiment and wide criticism of over pricing for the IPO ,retail portion of the issue subscribed only upto 50 % of the offer .But I feel many analysts and broking houses paid much attention to the pricing side and ignored the other .Company having many positives like a professional management under the leadership of Anjan Chatterjee with vast experience in this field,proven execution skills,rapid expansion ,asset light business model with good cash flow,excellent brand loyalty( Mainland China),low debt ..etc.As mentioned above it may seems fully priced in current market situation based on parameters like P/E ,but I don’t think stocks of companies with good growth potential will come at low P/E at any point of time rather higher P/E will be justified in future with good growth.Hence one with some risk appetite may go for it at CMP of Rs.156/-

Saturday, May 26, 2012

KERALA AYURVEDA Ltd - As the name suggests it is a Kerala based company operating in Ayurveda based products and services..Company manufacturing Ayurvedic medicines,running Ayurvedic Hospital and Clinics,operating Ayurveda based wellness centers and Resorts.KAL running an Ayurvedic Hospital at Aluva in Kerala and running more than 30 Ayurvedic clinics . Company selling its products through Ayurvedic Medical shops established in franchise model throughout India. Recently its ‘ AyurvedaGram ‘ located in Bangalore selected as the ‘ Wellness services provider company of the year 2011’ by Frost and Sullivan’ .In 2006.KAL taken over by Katra Group headed by Ramesh Vangal. He is well known in India as the person who brings Pepsi to our country and also his business Interests in Tamilnadu Merchantile bank and Scandant group.Even after the takeover by Vangal ,there is any substantial improvement in Company’s performance so far .In an interview,he explained that the company is in the process of establishing some base and standards and making some re arrangements in its business strategy.Anyway in recent times company streamlined the operations of its overseas subsidiaries and exited from some non performing assets.The business of Ayurveda having tremendous potential in India and abroad especially at a time there is more and more discussions about the side effects of Allopathy medicines.In medical tourism segment ayurvedic wellness centers having huge potential .Being a pioneer in all these segments KAL having very good future if it utilised properly.Vangal is a shrewd business man with great deal making skills and I don’t think he will waste the opportunity available in front.Recently KAL signed an agreement with Banaras Hindu University to undertake research and development in areas like geriatric care, cancer, anemia, metabolic diseases, diabetes and epidemic prevention, etc. In another important development KAL signed a Memorandum of Understanding with Tata Global Beverages to explore formation of a joint venture.Purpose of this JV will be to focus on development of a range of beverages and food products based on proven ayurvedic recipes and formulations for the global market.For the latest March quarter company posted sharp improvement on its performance. Turnover almost doubled and loss reduced substantially .Actually if we exclude a one time expenditure ,company posted a profit of Rs.2 Cr .Considering the history of promoter ,potential of the industry ,lack of other listed companies in this sector and its improving financial performance ,it is surely a company to watch .

Saturday, May 19, 2012

No doubt investment in stocks is a high risk high profit way to create wealth compared with investment in many other assets.Even in equity investment we have many choices like Blue chips,Mid caps,Penny stocks..etc depends on one’s risk profile.Many investors are willing to allocate a small part of their total equity corpus in micro caps and test their luck.Even we are willing to do so we must have at least some reasoning in selecting such stocks and not bet on any stock if even the promoter of the company selling it and only operators are playing with. This week , I am bringing two such stocks to your attention .Remember ,both of these are not value stocks and not eligible for investment based on any conventional parameters.Since the fortune of these stocks are depends on many IF’s and But’s ,only high risk investors with a willingness to loose the entire capital invested in it are requested to try it.

1) PCS TECHNOLOGY LTD

PCS Technology is now the only listed company owned by the promoters of erstwhile Patni Computer Systems Ltd ,after the selling of their flagship company to I-Gate Solutions. PCS is one of the first listed companies from the hardware space, made its IPO in 1989.Even the company having operations in IT and IT enabled segment it is known as a hardware player.What is interesting now is some important decisions regarding PCS taken by the management after deciding to sell their big company – Patni Computer.

A) Company decided to exit from its low margin hardware and system integration business and planning to concentrate in IT and IT enabled segment.

B) Decided to clean the balance sheet using the share premium account, realisation from land sale..etc

C) Sharp improvement of bottom line in latest quarter (Top line decreased due to the exit from hardware division on a phased manner)

D)Acquired new office premise at MIDC Area Mumbai

It is important to note that this scheme of arrangement to write off some dead assets and clean the balance sheet is entirely funded without any change in capital structure like reduction in share capital ,face value or such arrangements.Another important point is that the share holding of Patni family in this company is still as high as 70% .

If Patni family sold their flagship company Patni Coputer at price of $ 1 Billion and they are now taking renowned interest in their only other listed company ,in my opinion ,it is worth a bet at current market price of Rs.19/-

MILTON is a well known brand in Vacuum Flasks,Casseroles, Water Jugs ..etc. I suspect even many other household items are selling under this brand by some private limited companies of the same management . I am not sure who is the real owner of this brand whether it is the listed entity or the family who runs the company .Anyway, what is attracting now is the sharp increase of the share prices of some company’s like TTK Prestige and Butterfly Gandhimathi and the efforts of the promoter of MILTON to settle company’s dues with banks on a one time settlement basis .If the wealth created in the mentioned companies is an eye opener for this promoter too ,the brand MILTON is still strong for rewriting the future of this company . If they are ready to correct their past mistakes ,on settlement of dues with banks the entire business may be consolidated in the listed entity .Everything depends on promoters’ attitude and whether their efforts to settle dues is an indication for their changing mind ,only time will tell.... .More details about this company is available in their NEWLY launched website. CMP of Milton is Rs.11/-

Note : These scrips are only for investors with above average risk and willing to loose the entire capital invested in it.

Sunday, May 13, 2012

Nitta Gelatin( Formerly Kerala Chemicals) is a 46 % subsidiary of Japan based Nitta Glatin Inc.Kerala State Industrial Development Corporation (KSIDC) is the joint promoter with 34% stake .Company is manufacturing Edible and Pharmaceutical grade Gelatine,Ossein,Di Calcium Phospate ..etc.Company along with its subsidiary having three manufacturing facilities in India – Two in Kerala and One in Maharastra.Its products are mainly used in the processing of Confectionery,Diary products ,Beverages and for manufacturing gelatine Capsules.Last year company diversified into value added products like GELIXER COLLAGENPEP , SEEDAID, NUTRIGOLD, MEAT MEAL, CHITOSAN..etc . Due to unprecedented rise in its raw materials(Crushed Bone and Hydrochloric Acid ) and increased advertisement costfornew products, company reported lower profit in last year .But now it is slowly coming out of red and posted good profit in latest quarter by passing on its increased raw material cost to consumers and successful diversification into value added products..Due to pollution issues chances of substantialnew capacity addition is very low in the country.For the latest quarter ended March 2012, Nitta posted a turnover ofRs.68.73 Cr v/s Rs.49 Cr and a net profit of Rs.4.57 Cr (excluding other income) v/s a loss of Rs.1.67 Cr .For the full year Consolidated EPS is Rs.5.58/-. If company can exhibit the same performance shown in latest quarter,chances for strong re rating can’t be ruled out for this investor friendly company from current level of Rs.87/-

Saturday, May 5, 2012

HEG Ltd - one of the largest producers of Graphite Electrodes in Asia ,is a member of LNJ Bhilwara Group.Graphite Electrode is using to produce Steel through Electric Arc Furnace Route .Needle Coke is the raw material for producing Graphite Electrode.Company having a manufacturing capacity of 66,000 MT P/A and about 80 % of this is exporting to various countries.Company is supplying about 8 % of total world production of Graphite Electrode.Worldwide 35% of steel is produced through Electric Arc Furnace Route.Its customer list includes include Arcelormittal, Nucor ,Posco, Megasa Evraz,Hyundai Steel ,Tata Steel ..etc It is a power intensive industry where 5000 unit power is needed to produce one ton of graphite electrode.In such an industry HEG’s 77 MW captive power plant is a big positive. Due to revival in demand and price in recent times , HEG is now increasing its production capacity from 66000 ton to 80000 ton P/A.The demand scenario is improving worldwide and company is expected to benefit a lot going forward.For the December quarter HEG Posted a sales of Rs.418 Cr and a net profit of Rs.25 Cr .Recently company concluded a Buy Back of its own shares at a cost of Rs.67 Cr.In addition to this buy back ,promoters are hiking their stake very aggressively through open market purchases.Considering HEG’s leadership position in this industry and improving prospects of business ,recommending a Buy at CMP Rs.218/- for long term investment.

Friday, May 4, 2012

I have recommended a BUY on NITCO last year @ Rs,62/-. After hitting a high of Rs.71/- ,currently it is trading around Rs.40/-. Due to poor fourth quarter performance , recommending to SELL at CMP and book loss.

Wednesday, May 2, 2012

For the latest March quarter , company posted a turnover of Rs.39 Cr v/s Rs.20 Cr and a net profit of Rs.2.76 Cr v/s Rs.19 Lakhs .In 2011-12 full year company recorded a sale of Rs.125 Cr v/s Rs.87 Cr and a net profit of Rs.6.66 Cr v/s Rs.1.43 Cr .Today EPC quoted Ex-Rights basis @ Rs.115/- .Recommending to HOLD for long term.